You Can't Handle the Truth

As a result of the fallout of the Barclay's Libor scandal and resignation of its Chairman and CEO, it was further revealed that the Federal Reserve was aware of this fraud and manipulation for years. What's a trader or investor to do with such information and any other information reported by governments, central banks, and corporations? The message is loud and clear: if we don't think you can handle the truth, we are not giving it to you. The obvious next question is- What other reports might the powers that be, cooking? And this beat goes on, and on, and on...

Here is a multiple choice question:

Which Fraud disturbed you the most?

  1. The Barclay's Libor Rate Scandal
  2. The Fed Cover-Up of the Libor Rate Scandal
  3. The PFG Chapter 7 filing and arrest of its Chairman for embezzling $200 Million
  4. The MasterCard (MA) and Visa (V) Settlement for price fixing
  5. JPM's "tempest in a teapot" bad trade ($7.5 billion estimated)
  6. The Muni bond rip-off/collusion orchestrated by money center banks
  7. Viacom refusing to allow me to watch the season opener of "Breaking Bad" on my DirecTV?
  8. All of the Above

Correct Answer: None of the above!

The markets and the world at large seem to have been anesthetized to these daily headlines. Friday, the Dow climbed 200+ points, led by financials after hearing the good news that JPM is still in business. The irony here is that the internal office that oversees JPM's overall risk put on a trade that could have bankrupted the company, ruined millions of depositors, and caused another financial meltdown. All is well however, as JPM fired the entire ministry of silly trades and is back on track to bigger, and better earnings.

Now that we have gotten all that out of the way, the US Equity markets absorbed an abundance of bad news and general malfeasance and ended the week basically unchanged, regaining an unconfirmed bullish market phase. Since markets can be gauged by how they respond to news, one might conclude they have done a fine job. The leaders remain biotech (IBB), transports (IYT), and Real Estate (IYR). Cloud Computing (SKYY), which we highlighted last week as a potential short, underperformed by a wide margin and dropped almost 3%. With this mixed bag let's go to this week's video and check the markets pulse.


By Keith Schneider

10 thoughts on “You Can't Handle the Truth

  1. after you know that this is American corporate greed effecting all countries in the world, these people when entering other countries should be jailed.
    The use the CIA and other covert systems to manipulate for their own wealth, they are in positions of trust and they commit crimes against all people.
    when will the world jail white collar criminals?

  2. The truth is that the corruption goes much deeper than you seem to suspect. You got it right up to the point of acknowledging that the Fed "was aware of this fraud and manipulation for years", but the larger point you missed, namely that the Fed (along with the Treasury Dept, et al) is essentially *responsible* for the fraud and manipulation. The entire point of rigged LIBOR has been to provide unlimited funds in order to facilitate trillions of dollars of interest rate swaps, which have been used to maintain the 0% interest rate that enables perpetual trillion dollar US Federal deficits.

  3. Don't forget Pairgain/PFGBest (MF Global junior). By the way if the FBI can figure out what happened to PFGBest missing $200m in a few days, why after a year+ they still don't know what happened to MFG's missing $2b,
    but now that the Supremes have made lying legal under "freedom of speech", I guess we will never know the truth about anything.

  4. There is too much indication of manipulation of some market areas and too many financial connections far out in orbits around unknown planets. When I am merrily banging away in my particular segments I don't want to know my plans to invest in stock (or my own business of that same sector and type) are going to be damaged because ten million of los Grecos took a big loss on feta cheese futures and are bringing down a couple banks financed on it. And that other European banks will be damaged because of their own investments in those beeg fet Grik banks.

    At least my Calamos closed end junk bond funds pay a predictable return notwithstanding any decline/rise in share value. It pays the juice rate on my now reduced margin at Ameritrade. During the last week I sold off some stuff as I wouldn't stand the volatility for a second year. At least I can trade some physical silver to Bedouin caravans passing through after 2014.

  5. Are you serious? #8 All of them. Add to that:

    1. Retail sales down 3 months in a row, the only factor that was driving the economy is toast.
    2. Energy costs scheduled to triple because of new EPA carbon rules.
    3. Deficit FY12 = $1 trillion, longest > trillion deficits in the history of the country. Nearing debt ceiling in < 1 year.
    4. Unemployment 8.2% official rate, U6 = 14.99%. Want recovery? Look someplace else.
    5. Tax rates about to go over the cliff along with prosperity and any opportunity.
    6. Can someone please (!) NUKE WASHINGTON DC! Seriously, it's the only thing that will rid us of the parasitic, bubonic plague that is the "elected official" or "public servant". Oops, just had to throw up after writing that - see, they really do make me SICK.

    The situation on Wall Street is indicative of larger trends in society: NO ETHICS = NO TRUST. When individuals no longer trust in any societal institutions, like the markets, you can be sure collapse in around the next bend in the road. Brace yourself. It's coming sooner than you ever imagined. Stock up on TP and then kiss your a$$ goodbye.

  6. These are all so irrelevant compared with the fact that no one is talking about the greatest rip-off ever done in the history of mankind, namely the Wall Street crash of 08. The bankers got Glass Stegal repealed so they could get too big to fail and took the teeth out of the SEC so that they could avoid what happended after the S & L scandal in the late 80's and early 90's where Clinton put 300 of them into jail. With enough Washington lobbyists anything was possible. The 08 crash was 20 times the
    S & L scandal of 90.
    With the exception of a few ponzi guys like Madoff, no one has gone to jail. Nada!
    At the turn of the earlier century, in 1900, Teddy Rosevelt went to war against the big corporate trusts built around oil and steel. His trust busting began a new era in business until things got out of control again in 29, but that is another story.

  7. And last but not least The MF Global.
    I am out and am planning to stay out of the equity market for a very long time.
    Good luck to everyone!

      1. Scharr,
        Your question makes no sense. I've given up on the rigged equity but last I checked there are other markets for the currencies and commodities and bonds and much more.
        So again, your question makes no sense.

        1. And you think those aren't manipulated? Silver is possibly the most manipulated commodity going back to the Hunt Bros.

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